EU CREDIT UPDATE: Suedzucker (SZUGR: Sub Ba1 neg/BB) New Issue Final
Final: €700m @ 6%
• Books: 1.6bn
• IPT: €Bmk PerpNC5.25 6.25%-6.375%
• FV: 5.75%. Taking the wider end of the Sub-Sen spectrum; Bayer +215 is a useful guide. Senior comes out around +135bps, interpolating 27s-32s (82-148 +5bps for curve). Swaps 2.35%. 2.35% +135 +215 = 5.75%.
• Arguably, SZUGR senior should be wider if non-retail. But on the other hand does not face the same legal risk of Bayer.
• Size is BMk but with the existing €700m we would assume this is what they want to print. The old deal is being redeemed at Par via Tender and Call.
• (Retail denoms) SZUGR 4.125 32 came DBR+192; currently screening +151 mid. S&P cut to BBB- Stable on 16th May on delayed deleveraging prospects. Sugar currently makes up 40% of sales. Fruit and Speciality Products are the better performing sectors.
• Note: The new issue is better rated than the old 2005 deal (Ba3/B+) as the mandatory coupon deferral language has been taken out.
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US TSY OPTIONS: Early Treasury Option Roundup
Mixed Treasury option flow gradually picking up ahead the NY open, light overnight trade with Europe closed for Easter Monday. Underlying futures extending lows, curves twisting steeper with short end resisting sell-off, 2s10s +9.053 at 61.299. Despite this morning's sell-off, projected rate hike pricing gain slightly vs. Thursday levels (*) as follows: May'25 at -3.4bp (-2.7bp), Jun'25 at -19.0bp (-17.6bp), Jul'25 at -40.1bp (-38.6bp), Sep'25 -59.9bp (-57.4bp).
- Treasury Options:
- 4,000 TYK5 109.5/111 put spds vs. 111/111.5 call spds ref 110-30
- 2,000 TYK5 110.75/111.5 strangles 30 ref 110-29.5
- 1,500 FVM5 108.5/109 call spds, 14.5 ref 108-16.5
- over 7,400 TYM5 114 calls, 14 last
- over 6,000 TYK5 110.75 puts 18 last
- over 9,900 TYK5 110 puts, partly tied to 109/110 2x1 put spds
- 2,500 wk2 TY 112 calls ref 111-06
US TSY FUTURES: Extending Lows
- Futures extending lows again, sellers meet limited buy interest, low overall volumes volumes at Jun'25 10Y trades down to 110-30 (-7.5), total volume just over 151k. 10Y yield climbs to 4.3676% (+.0427).
- Initial Technical support below at 110-15/109-08 (Low Apr 15 / 11 and the bear trigger); Continued weakness would refocus attention on 109-08, the Apr 11 low. A break of this level would resume the downtrend.
LOOK AHEAD: Monday Data Calendar: Chicago Fed Goolsbee, Leading Index, Tsy Bills
- US Data/Speaker Calendar (prior, estimate)
- 21-Apr 0830 Chicago Fed Goolsbee interview on CNBC
- 21-Apr 1000 Leading Index (-0.3%, -0.5%)
- 21-Apr 1130 US Tsy $76B 13W, $68B 26W bill auctions
